Would you prefer your money going into your retirement savings for the future, or into higher mortgage and credit card repayments?
Of course we prefer money being put into our savings.
That is why Labour will bring changes to the Reserve Bank of New Zealand.
Right now, if the Bank wants to bring down inflation, it raises interest rates.
But that means people pay higher interest rates on their mortgages, with most of that money going offshore because our main banks are foreign-owned.
Higher mortgages also make our houses less affordable.
Instead, Labour is proposing that when inflation needs to be brought down, rather than simply putting up interest rates, we will let the KiwiSaver contribution rate be adjusted.
That means money will be going into your KiwiSaver account, not into banks.
We will save more as a country and pay less in interest.
In turn, that will mean lower mortgage and credit card payments for families, as well as lower borrowing costs for businesses. That will flow on to a lower exchange rate, which will boost our exporters and create jobs.
We will also make KiwiSaver universal so that everyone is included.
That is just one idea on how to change the economy. There are many others.
A Labour government will also broaden the objectives of RBNZ so that it is not just about managing inflation but also building a healthier economy.
We will also tackle the sources of inflation, not just the symptoms.
A big part of our problem is our overinflated housing market.
Labour will address this by building more affordable houses through our ‘KiwiBuild Policy.’ Capital Gains Tax will target property speculators. And foreign speculators will be prevented from buying houses and pushing prices up beyond the reach of those of us who live here.
Australia has A$1.5 trillion tucked away from its compulsory version of KiwiSaver.
We are already 25 years behind them and playing catch-up.
Universal KiwiSaver will mean everyone will be better off because we will not only have a low interest rate and fair exchange rate regime, but everyone will have their own savings nest egg as well.
Labour’s plan is to deliver lower mortgage rates, a fair exchange rate, more jobs, and higher wages. We will preserve the good things about the current system, while making it fit for the 21st century.
We cannot simply operate as we have done for 25 years when it is not working for New Zealand.
By international standards, we have higher interest rates, higher mortgage payments, and an over-valued currency, which force our exporters out of business and our firms undercut at home.
This is costing Kiwis jobs, making home ownership unaffordable for many, and leaving us with international debt.
It does not have to be this way. Labour’s got a smarter approach.
The Party’s vision is for our exporters to thrive, bringing in more income into New Zealand, and creating more jobs and higher wages for all New Zealanders.
This policy will help to achieve that vision.
Labour’s monetary policy has received support from exporters and economics commentators across the board.
While the current government is stuck in the past, we are offering a plan for the future.